Poor use of taxpayers' money in Cornwall

July 06, 2015 4:41 PM

The poor use of European taxpayers’ money spent in Cornwall has been strongly criticised by a recent report. Key findings by an independent analysis of £465m of EU convergence money, meant to grow the economy in the South West between 2007 and 2013, highlighted the fact that 10,000 new jobs had failed to be created as promised—just 11% of the original target had been met by the end of 2012. In addition it was found that private sector investment was £437.9m below target and there had been significant underperformance in terms of providing sites and premises.

Over the period of time and for a sum of taxpayers’ money just short of half a billion pounds, only 3,557 jobs had been created by the substantial investment.

"It’s pretty damning in many ways," says the Chief Executive of the Cornwall Chamber of Commerce, "the vast majority of money that’s been spent in Cornwall and the Scillies over the past 15 years has not resulted in the number of jobs or the value added that we were expecting. You’ve got some absolutely damning statistics, for example in the research and development fund, the cost per job was £160,000 per person."

In its conclusion, the report by Amion Consulting Ltd said: "When compared with benchmarks, the innovation and R&D programme also does not appear to offer good value for money. For example, the average public sector cost per net additional job identified in the Department for Communities and Local Government’s Valuing the Benefits of Regeneration report in relation to business enterprise research and development is £57,209—significantly lower than the cost per job ratios derived for the [Convergence Programme’s] innovation and R&D programme." Indeed not - it's a cost per gross job of £181,280 - £287,310.

As for stimulating jobs among the self-employed, the report said "whilst the investments have been crucial in unlocking workspace schemes, the combined costs of delivering these projects looks very high at this stage. Future value for money should be better as more of the development which has been unlocked comes forward and, potentially too, as the gap funding requirements of workspace schemes falls with the recovery of the national economy."

Above all, the report demanded that ‘monitoring and reporting processes need to be reviewed to ensure they are understood by project managers and there is an appropriate balance struck between their effectiveness and their proportionality to the level of funding involved.’

Let’s hope these lessons are learned before yet more taxpayers’ money is poured into poor value for money projects across the UK.

EDIT: The ERDF Convergence Communications Team have responded.

The Convergence Programme saw 458.1m Euros of European Regional Development Fund investment being made into Cornwall and the Isles of Scilly from 2007 to the present day.

A wide range of investments have been made. These will have a lasting impact in the area and will continue to generate jobs and GVA for Cornwall and the Isles of Scilly – long after the funding has ceased and the outputs have stopped being counted at the end of this year.

An evaluation of the majority of projects under the Programme was undertaken to help local partners understand the impact of the investment. It is accepted that, based on this partial assessment, the Programme did not achieve the level of outputs that were originally set. However, some key projects, such as Superfast Broadband, have only just completed their evaluation which reported an additional 2,000 jobs being created as a result of the project.

To a large extent, this is because the output targets for the Programme were developed in 2006 when the Cornwall and Isles of Scilly economy was seeing significant growth. In 2008 the global recession hit and at a mid-point Programme review in 2010, the Programme was advised to reduce its ambitious targets. However, the Programme Monitoring Committee chose not to revise its targets because it wanted the programme to maintain its ‘ambition’ (that is, trying to get the most out of the investments made).

The impact of the recession is clearly identified within the Evaluation. The Evaluation also notes that Programmes in other parts of the UK have also been experiencing similar issues.

We need to be mindful that ERDF Convergence was an economic journey; the objective was to establish the momentum for transforming the economy to a high value added economy where knowledge, environment and quality of life underpin sustainable economic growth. The lessons learnt from the recent Evaluation of ERDF Convergence (including the need for more joined up funding, quicker appraisals, easier applications and more local delivery) will be carried forward into the next European Funding Programme to ensure that Cornwall’s journey continues.

The evaluation should be seen as a point in time and not the final impact of the funding.

It is also worth bearing in mind that Convergence consists of 2 structural funds. ERDF was 458.1m Euros and ESF (European Social Fund) was 196m Euros. ESF investments were concerned with improving the skills of the people of Cornwall and the Isles of Scilly. ESF targets have been exceeded.